S&P Slaps Michael Saylor’s Strategy With Junk Rating Over Bitcoin-Heavy Balance Sheet

S&P Global Ratings has given Michael Saylor’s Strategy a “ B-” credit rating , a level considered junk or speculative ￰1￱ firm, formerly known as MicroStrategy, earned the rating due to its heavy Bitcoin exposure, limited business diversification and weak dollar liquidity. S&P said the outlook for the company remains ￰2￱ rating makes Strategy the first Bitcoin treasury company to receive a formal credit grade from a major agency. Strategy, which has rebranded from a software firm into a Bitcoin holding company, uses proceeds from equity and debt issuance to purchase and hold the cryptocurrency as part of its treasury ￰3￱ Bitcoin Holdings Leave Strategy Vulnerable to Price Swings and Policy Shifts S&P indicated that Strategy’s concentration in Bitcoin is both its defining strength and its greatest ￰4￱ company’s balance sheet is almost entirely exposed to the digital asset, leaving it highly sensitive to market volatility and potential regulatory changes.

S&P Global Ratings has assigned Strategy Inc a 'B-' Issuer Credit Rating (Outlook Stable) — the first-ever rating of a Bitcoin Treasury Company by a major credit rating agency. ￰0￱ — Michael Saylor (@saylor) October 27, 2025 The rating agency also noted a structural mismatch, since Strategy’s debt and preferred stock obligations are denominated in US dollars, while most of its assets are held in ￰5￱ of June 2025, the company held roughly $70b worth of Bitcoin, while total convertible debt stood at about $8b, maturing from 2028 onward. S&P said Strategy’s ability to manage its debt maturities through capital market access is a key factor behind the stable ￰6￱ Cite Structurally Thin Cushion as Bitcoin Assets Dominate Company Valuation Still, analysts flagged that the company’s adjusted capital position remains “significantly negative.” Since S&P deducts Bitcoin assets from equity when calculating adjusted capital, Strategy’s heavy crypto exposure results in a structurally weak capital ￰7￱ company’s risk-adjusted capital ratio was deeply negative in mid-2025, driven by the volatility and non-yielding nature of its holdings.

Strategy’s core software business, which provides enterprise analytics tools, remains marginally profitable and contributes little to operating cash ￰8￱ the first half of 2025, the company reported a negative $37m in cash flow from operations, while its pre-tax earnings of $8.1b were almost entirely due to Bitcoin price gains. S&P Says $80B Market Cap Reflects Investor Appetite Despite Concentrated Bitcoin Risk S&P also cited cybersecurity as a material ￰9￱ holds Bitcoin through multiple institutional custodians, but insurance coverage represents only a small fraction of its total ￰10￱ agency said any loss of private keys or custodial failure could significantly impair the company’s liquidity ￰11￱ those weaknesses, S&P credited Strategy with disciplined debt management and strong access to capital ￰12￱ company has consistently refinanced its obligations through convertible debt and equity issuance, avoiding near-term ￰13￱ market capitalization stands at roughly $80b, reflecting investor appetite for exposure to Bitcoin through traditional ￰14￱ Outlook Hinges on Access to Capital Markets and Dollar Liquidity Improvements S&P said the company’s liquidity profile is strained by preferred equity dividends totaling more than $640m annually, although these payments are small relative to its total Bitcoin ￰15￱ company can defer those dividends, but doing so would carry governance consequences, including granting preferred shareholders board ￰16￱ ahead, S&P said an upgrade is unlikely in the next 12 months but could occur if Strategy improves its dollar liquidity and reduces reliance on convertible debt.

A downgrade, however, could follow if the company loses market access or faces severe Bitcoin price declines.